Mediclinic 5 month trading numbers

Mediclinic has released a five month trading update this morning. The first half of the year ends on the 30th of September, that is Friday, right? The results themselves are expected to be released on the 10th of November. Is this a case of simply taking the five month revenues and presuming that the last month will be similar? It is a bit weird to have a five month trading update, I know that it is something that Richemont does too.

Anyhows, Mediclinic point out that in their first market, South Africa, they are happy with where they are, in spite of increased competition and a weak macro environment. I suppose there are certain procedures that you can and will put off if the home fires on the finances front are not burning that strong. Margins are expected to shrink a little as a result of higher pharma prices and improvement in clinical personal (meaning more people) and paying their staff better. The last thing you want as a patient is having a grumpy nurse or admin person when you are there for something that may seem routine to them, it isn't to you.

Let us take the sales numbers and translate them back to Great British Pounds, for ease of use and looking at one currency. ZA sales are 6.054 billion Rand, or 343.88 million Pounds. Switzerland sales are 677 million Swiss Francs, or 536.87 million Pounds. Middle East sales were 1.315 billion UAE Dirhams, or 275.56 million Pounds. Total sales are then 1.15731 billion Great British Pounds for the first five months of the year, if you try and figure out the half year, you are likely to get to a number of 1.388 billion Pounds (1.8 billion Dollars). Or global sales of around 24.425 billion Rand for a half, nearly 50 billion Rand annualised.

Remember that Mediclinic also owns around 29.9 percent of Spire Healthcare, that company delivered annual revenues of 884.8 million Pounds. If you take a half year, and then multiple it by 29.9 percent, and then presume that there is an around 4 odd percent rise, you get to around 114.5 million pounds. That is for the five month period, comparable to these numbers of course. The split on a revenue basis is 42.21 percent Switzerland, 27.04 percent South Africa, 21.74 percent the UAE and 9.01 percent the UK. It looks like a business that will trend to higher sales in the UK, I am sure that they would want that in time.

The outlook, and I am sure that will be again fleshed out at the results in the first half of November, suggests stability in Switzerland with modest growth, doing OK here in Southern Africa, and in the UAE expectations are low to mid digit sales growth with EBITDA margins to be around the mid to high teens (15-18 I guess). The second half, as a result of the integration in the UAE and opening of new facilities, is expected to yield more favourable results. Thats is it, more in November, it all looks inline and reasonable to me.

The Mediclinic share price has been under the pump lately. In part the pound has been pounded. Which should mean higher revenues from their overseas business, in particular in Switzerland where the EBIDTA margins are better. Perhaps Mediclinic are also looking to take a bigger stake in Spire, they would have to raise more money in the UK, which would make the company a riskier proposition. The UK price is down 10.53 percent. In Rands it is worse, the stronger Rand has exacerbated the losses in the share price. We maintain our buy, in what is a quality business with great growth aspirations. The weak share price definitely is a big opportunity.